Key 2023 Investment Trends You Can't Miss

For students aspiring for careers in #invesmentbanking #assetmanagement and #markets your prep is incomplete if you don't follow the markets closely enough to have an "informed opinion" to share with hiring managers in interviews. Here are some trends you'll be expected to know:

👉 Trend 1: COVID-Induced Digital Acceleration

Prioritizing digital acceleration is essential in building resilience. Research from #McKinsey reveals that in past crises, companies that prioritized innovation emerged stronger post-crisis, outperforming the market average by more than 30%. Transformative tech like AI, IoT, VR and AR, cloud computing, #blockchain will power the way.

👉 Trend 2: High Inflation & Increasing Interest Rate

Although inflation will likely peak soon to prompt the Fed be less hawkish, equity markets are unlikely to turnaround. Fed Funds Rate will likely stay heightened throughout 2024, with #jpmorgan changing its house view from being at 4.5% end of 2023, to early 2023 (projected to stay at 3.9 in 2024) - hurting equity markets as a whole. Central banks around the world are far behind the Fed in terms of rate hikes, and their hiking cycles have not peaked yet.

Inflation may be a lot more sticky than expected as commodity prices are expected to remain risen, and that current rate hikes do not affect that many loans and mortgages as many of these are locked in at a fixed rate- hence does not diminish consumer spending power to slow the aggregate demand.

👉Trend 3: Russia Ukraine War

Energy prices are record highs and they remain extremely volatile. Before the invasion of Ukraine, wholesale gas prices were around 200% higher. Huge political uncertainty around the globe is likely to hinder economic growth, particularly with the sanctions between US-China, and Russia with the rest of the world.

Concerns of EU securing energy contracts to avoid a crisis throughout winter Putin’s threat to invade Taiwan over Pelosi tensions, and US banks warning the Chinese about existing if it does. Overall, poor macroeconomic and political climate for a recovery in equity markets + Jerome Powell says that chances of a soft-landing are receding, which only stands at 10% according to an economic model maintained by the Fed.

👉Trend 4: China’s Markets Open Up

China’s economy is reopening after 3 years of Covid isolation. The positive impact of these easing measures should go beyond international travellers. Analysts at #Citi forecast retail sales would grow 11 per cent during 2023 to Rmb50tn ($7tn) and suggested that it was possible most major cities would pass the peak wave of infections before mid-Jan. Analysts are taking a neutral stance as they see China on a path to lower growth. Tighter state control of the economy makes Chinese assets riskier.

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